New Nationwide and Virgin Money announcement as customers will see change 'from Wednesday'

New Nationwide and Virgin Money announcement as customers will see change 'from Wednesday' It is the latest big name to make such a change so far this week Nationwide has made a new announcement today confirming changes for customers from Wednesday. It said it was cutting mortgage rates by up to 0.15%, although it is increasing trackers by up to 0.10%. From Wednesday, November 4, Nationwide is reducing a wide range of fixed rates by up to 0.15%. It is also increasing a small range of tracker rates by up to 0.10%. This includes rates across its First Time Buyer, Home Mover, Existing Customer Moving Home and Remortgage products. It has also been announced that Nationwide-owned Virgin Money will be, from Wednesday, reducing purchase two-year fixed rates by up to 0.12%, while five-year fixed rates will be reduced by up to 0.13%. Shared ownership fixed rates will be reduced by up to 0.10%, while remortgage two-year fixed rates will be reduced by up to 0.10% and five-year fixed rates will be reduced by up to 0.17%. This comes as Barclays and Halifax also announced cuts earlier this week. Growing competition Experts told Newspage that the cuts point to growing competition between major lenders for fixed-rate borrowers. But Nationwide’s decision to increase some tracker rates highlights how different types of mortgage can move in opposite directions. They warn that borrowers taking out one of the affected trackers could face both a higher starting rate and a further increase if the Bank of England raises Bank Rate. Fixed deals already reflect market expectations for future interest rates, giving lenders room to reduce prices despite the prospect of a rise. Doug Miller, mortgage broker and director of Bath-based Lansdown Financial Services, said growing competition was offering borrowers relief. He added: “Nationwide cutting fixed mortgage rates just days before a potential Bank of England rate rise is welcome news for borrowers. Several major lenders have reduced rates this week, and competition is clearly heating up. Interestingly, tracker rates are moving in the opposite direction. "Fixed rates are largely influenced by swap rates, reflecting expectations of future interest rates, while trackers are linked to the Bank of England base rate. While the increase in some tracker rates may raise eyebrows, lenders price their products independently. "Nationwide's decision to cut fixed rates while increasing tracker pricing highlights how differently the two products can move, particularly when competition for mortgage business is fierce. It goes to show that a Bank of England rate rise doesn't automatically mean fixed mortgage rates will follow, and every rate reduction we're seeing at the moment is welcome relief for borrowers.” Following other lenders Riz Malik, Independent Financial Adviser at Southend-on-Sea-based R3 Wealth, said the contrasting changes could reflect Nationwide’s efforts to manage demand and profit margins. He added: "Nationwide joins other high street lenders by making post-Budget rate reductions on selected fixed rates, but has chosen to increase some trackers. This could be down to managing business volumes and margins, but it is noticeable, especially ahead of an anticipated increase in the Bank of England base rate.” Rohit Kohli, senior mortgage adviser for residential and commercial at Romsey-based The Mortgage Stop, said the tracker increases could leave new borrowers facing two successive rises. He added: "Barclays, Halifax and now Nationwide. It’s another modest reduction and a welcome one with experts saying a Bank Rate rise is all but nailed on for Thursday. It’s the tracker increase that caught my eye. "Fixed rates already reflect much of what the markets expect, which leaves lenders room to compete. Trackers follow Bank Rate, so they were expected to go up on Thursday anyway. Nationwide is adding to that in advance, which means a double hit for anyone taking out a tracker. “Some could call it a cynical move. Make trackers less palatable, trim fixed rates, and more borrowers get pushed towards a fix after Thursday. It’s convenient timing, if nothing else." Toby Quanstrom, director of Eastbourne-based Quanstrom Financial, said falling fixed rates and rising tracker prices could make payment certainty more attractive to borrowers. He added: “Anyone taking out a Nationwide tracker this week could be hit twice: once by tomorrow’s price rise and again if base rate goes up on Thursday as markets expect. That is why the fixed rate cuts matter more. "Lenders price fixed deals off swap rates, which already assume a rise, so Nationwide can cut them even as the Bank looks set to tighten. Trackers follow base rate directly and have nowhere to hide. Rising trackers and falling fixes are closing the gap from both sides, and for many borrowers the certainty of a fix may now look more attractive.” Different mortgage types Stephen Perkins, mortgage broker and managing director of Norwich-based Yellow Brick Mortgages, said the different pricing decisions reflected how fixed and tracker mortgages worked. He added: “Nationwide cutting fixed rates while increasing trackers looks contradictory, but the two products are priced very differently. Fixed rates are heavily influenced by swap rates, funding costs and competition, while a tracker is essentially Bank Rate plus the lender’s chosen margin. "So Nationwide can decide it wants to compete harder for fixed-rate business while simultaneously increasing the margin on some new tracker products. It does not necessarily tell us that mortgage rates generally are heading in one direction or the other. What it does show is how competitive the fixed-rate market is becoming, with several major lenders now cutting prices within days of each other.” David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth, said Nationwide appeared to be making its trackers less competitive. He added: "Nationwide cutting fixed rates while increasing trackers might look like the mortgage market has forgotten which way is up, but the two are driven by different forces. Fixed deals reflect swap rates and expectations for where interest rates are heading over the next few years, while trackers are much more closely linked to Bank Rate and the margin lenders want to make. “With a BoE Base Rate increase imminent, Nationwide are simply pricing themselves out of the tracker market for now. The good news is that competition in the fixed-rate market remains alive and kicking, and another 0.15% off will be very welcome for first-time buyers, home movers and those coming up for remortgage. It’s another reminder that mortgage pricing rarely moves in a straight line and at the minute, it’s less of a market and more of a hokey-cokey.” Justin Moy, managing director at Chelmsford-based EHF Mortgages, said the combined changes could shift demand towards fixed deals. He added: "As expected, once Halifax and Barclays had shown their hands, Nationwide and Virgin Money have also announced several cheaper fixed rate deals. The move by Nationwide to increase the tracker margins is simply to make the fixed rates more attractive. A cut of say 0.15% on fixed rates and an increase of 0.10% on trackers creates a 0.25% swing in pricing and may encourage more uptake of fixed rates at a time that trackers may be too popular."